What does a designer underwear startup have to do with asbestos? Until recently, nothing. But in the case of Santa Monica-based ecommerce company MeUndies, some bad decisions involving removal of the known carcinogen means that the company will be without its founder and CEO for the next year.

In a decision handed down by a Chief U.S. District Judge in Dallas on February 28, but not reported by the tech or business press in the weeks since, MeUndies co-founder Jonathan Shokrian was sentenced to 12 months and one day in federal prison and a $25,000 fine following a guilty plea for a 2008 Clean Air Act violation. His father, Elias Shokrian, paid a $500,000 fine on behalf of the family’s Beverly Hills-based real estate investment and property management company Califco in relation to the same violation.

While attending Dallas’ Southern Methodist University, Jonathan Shokrian, worked for Califco as a Regional Director. In this capacity, he oversaw an asbestos removal project at a property called Fazio’s department store in the Plymouth Park Shopping Center. According to the US Attorney, rather than hiring a specialized asbestos removal service – something he had done previously on other projects – Shokrian simply hired two day laborers to complete the task, providing them with masks, respirators and other tools that offered inadequate protection. The workers then used floor grinders and hand tools to remove the asbestos floor tiles, subsequently dumping the waste material in a city landfill.

The low-budget operation was uncovered by the local fire department when the workers, allegedly at Shokrian’s direction, covered the contaminated tiles with gasoline, prompting neighbors to complain about the smell. The area was evacuated as a result and the case became a Clean Air Act violation.

Despite the guilty plea, Shokrian has denied responsibility for the incident, telling the Dallas Observer, “I had no choice but to sign a lot of documents that misrepresented the truth [or risk more prison time].” He subsequently shifted blame to a Califco construction manager who he said examined the property for asbestos and concluded that the tiles in question were low risk.

As bad as the outcome is for Shokrian, it’s not much better for MeUndies, which lost its CEO and faces a PR black eye for its association with the ugly incident. The case, which involves a wealthy family seemingly shirking its responsibilities to protect its employees and neighbors, raises uncomfortable questions at a time when Silicon Valley is mired in class tensions and the country as a whole is suffering from crippling income inequality.

It’s unclear what impact Shokrian’s arrest will have on his ownership in MeUndies or what role the founder will have once released from prison. MeUndies replaced Shokrian as CEO during the early stages of the Dallas trial, hiring Bryan Lalezarian in February 2013, according to LinkedIn. The four-year-old company has raised just $1.4 million to date (from unnamed investors).

Clever and provocative advertising is one way to build a brand, and it appears to be working well for MeUndies to date. But for all the attention, MeUndies remains a relatively small company of less than 10 employees and seemingly modest revenues.

As we’ve explored at length here at Pando, ecommerce is incredibly unforgiving. MeUndies will need to execute flawlessly, both on the brand building and the operational sides of its house if it wants to see the business thrive. It would also do well to distance itself from Shokrian and avoid future run-ins with the law. There’s only so much real controversy an irreverent underwear startup can take.

MeUndies did not reply to Pando’s request for comment on this news (~2 hours prior to publication). We will update this post with additional information if and when it becomes available.

Update (5/19/14, 9:00pm): MeUndies Director of Business Development Dan King provided the following comment to Pando via email:

Greg is on a flight, we wanted to send over a couple comments. Keep in mind, we are discussing an event that took place six years ago in TX, long before MeUndies was founded. So although it is now a topic of conversation, it is something that we have foreseen and planned for well in advance as a company. As a result, we have a great team in place, comprised of 15 awesome people, including the leadership of Bryan as CEO since last year.

Jonathan is a talented visionary and has helped build a great brand at MeUndies. With that foundation in place, we continue to hit record revenue numbers each month. So the numbers suggest that MeUndies is a strong as ever, and we couldn’t be more excited to continue our growth path and deliver the world’s most comfortable underwear to new customers each day.

MeUndies is a lifestyle brand that is transforming the way people perceive and purchase their basics. As a vertically integrated, direct-to-consumer company we do it all: from design and manufacturing, to marketing and web design & development, to fulfillment and shipping, MeUndies delivers The World’s Most Comfortable Basics with a relentless emphasis on quality and service.

Michael Carney is a West Coast Editor at PandoDaily, covering venture capital, financial technologies, ecommerce, on-demand services, and the future of television, among other subjects. He has spent his career exploring the world of early stage technology as an entrepreneur and early-stage investor, working in multiple countries within North and South America and Asia. He is an enthusiast of all things shiny and electronic and is inspired by those who build businesses and regularly tackle difficult problems. You can follow Michael on Twitter @mcarney.

Facebook has introduced Scrapbook, a new feature that allows parents to share and collect images of their children in one place without requiring them to worry about tagging their kids’ face with each other’s names just to make sure they don’t miss what the other person has posted. [Source: Facebook]

“For all the clumsy rhetorical lip service [former Yahoo News head] Guy Vidra pays to The New Republic’s hallowed intellectual traditions, this is what his vision of a nimble digital news product finally translates into: a vaguely journalistic veneer strategically designed to conceal a rancid interior of ‘elevated’ advertising.”

Indian e-commerce company Flipkart is said to be raising $600 million in its latest bid to compete with Amazon. The company is also said to have garnered a higher valuation with this funding round — quite the feat, considering it was previously valued at around $11.5 billion. [Source: The Economic Times]

Here comes another unicorn: Sprinklr, a New York-based marketing company, has raised $46 million at a $1.17 billion valuation. The funds will be used to help the 700-person company expand its marketing platform. [Source: Fortune]

Curator, the tool Twitter created so the media could find and share tweets with its audience, is now available to the public. Because if there’s anything people wanted to see more of, it’s tweets randomly inserted into blog posts, television spots, and other forms of media. [Source: TechCrunch]

A court in France has decided not to ban Uber’s low-cost services until the country’s highest appeals court, or its supreme court, weigh in on the constitutionality of a new transport law. [Source: The Wall Street Journal]

Tinder is refocusing on its spam-fighting efforts in the wake of reports that movie studios are using the service to promote their movies, scammers are attempting to steal information via the app, and pranksters have created tools that trick heterosexual men into flirting with each other. [Source: The Verge]

Uber offers drivers whose accounts have been deactivated a choice: attend a class that requires them to pass an exam, or take a class that doesn’t. The latter has been informed by Uber employees, and the company has sent thousands of drivers to it, according to a report from BuzzFeed. Why is that a problem? Because Uber isn’t supposed to provide its drivers with formal training; doing so makes them bona fide employees, not independent contractors. [Source: BuzzFeed]

Flipboard users will now be able to collect articles and share them via private magazines visible only to members of certain groups. The feature is aimed at students working in the same class, companies sharing press coverage, and other groups that might want an easy way to share Web pages with each other without having to use public tools like Facebook or Twitter. [Source: Flipboard]

T-Mobile has tasked its customers with creating a real-world coverage map that makes it easier to tell where its service works and where it doesn’t. Instead of guessing at where its customers will get service — which is what other carriers do, the company claims — it’s asking people to verify its predictions so it can be more honest with consumers. [Source: T-Mobile]